The correct answer is: B. accruals accounts
Accruals accounts are accounts that record expenses that have been incurred but not yet paid. Wages and salaries of employees are an example of an expense that is typically accrued. This is because employees typically work for a period of time before they are paid, and the company needs to record the expense in the period in which it was incurred, even though the payment may not be made until a later period.
Accruals accounts are important because they help to ensure that the company’s financial statements are accurate. If expenses are not recorded in the period in which they are incurred, the company’s financial statements will be overstated. This can lead to inaccurate decisions being made by investors and other stakeholders.
Here is a brief explanation of each option:
- A. Accrued expenses are expenses that have been incurred but not yet paid. Wages and salaries of employees are an example of an expense that is typically accrued.
- B. Accruals accounts are accounts that record accrued expenses.
- C. Both A and B are correct. Accrued expenses are recorded in accruals accounts.
- D. Zero liabilities is incorrect. Accrued expenses are liabilities, as they represent a future obligation to pay employees.